Is it Feasible to Provide Genetically Modified Crops to Small Farmers on Preferential Terms? : An Ex Ante Analysis of Bt Eggplant in India

Is it feasible to provide genetically modified crops to small farmers on preferential terms? Who benefits from introducing technologies targeted at resource-poor farmers? Building on the literature on assessing the welfare benefits from introduction of technologies developed by suppliers of agricultural inputs (private sector), we conduct an ex ante analysis of the distribution of the benefits from introducing Bt eggplant in India. Using data from the contingent valuation survey, we also assess the economic viability of the public-private partnership involved in the development of Bt eggplant. Our study showed that consumers gain maximum of the total surplus generated (60%) due to the introduction of Bt hybrid technology while innovator's gain is about 7%. Even though the company has a wide range of prices to select from, marketing Bt hybrid seeds at an affordable price increases the total surplus generated without affecting company's share of rents significantly. Our data and analysis clearly show that many farmers (growing traditional varieties-Open Pollinated Varieties (OPV)) are willing to adopt Bt OPV provided their varietal preference criteria are met. Our study suggests that providing Bt OPV on preferential terms to resource-poor farmers would not be detrimental to the firm's interest. Even though, due to the low price of Bt OPV some of the farmers decided to adopt Bt hybrid might shift to Bt OPV, most of the hybrid growers would prefer Bt hybrid over Bt OPV. The size and distribution of benefits would change as more Bt eggplant varieties are made available, but results from our study provide an initial empirical estimate of potential benefits arising from the introduction of Bt eggplant in India.